TORONTO - Time is not on Nortel's side but there's no sense being too hasty in deciding whether the battered telecom equipment company should try to remain a stand-alone entity or agree to be absorbed by another company, chief executive Mike Zafirovski said Monday.

A 37 per cent decline in revenue and shrinking margins pushed Nortel Networks Corp. (TSX:NT) to a US$507-million loss in the first quarter, the Toronto-headquartered company announced Monday in its first financial report since seeking bankruptcy protection in January.

Zafirovski said the industry needs to consolidate but it will take one to two additional months for Nortel's board and management to determine whether to try to go it alone as originally planned or join with another player.

"We do know that time is not our friend. At the same time, if you act in haste, you do not drive normally good transactions for your stakeholders, including employment, including preserving technologies. And that's what we're trying to balance," Zafirovski said in an interview.

Nortel's customer base has remained loyal despite the company's problems but there had been negative impact from uncertainty surrounding the company's future, he said.

"I don't think we've lost a single customer in this process," Zafirovski said. "What's hurting us is that if you have brand-new projects, people are deferring many of those decisions above and beyond the economy, waiting to see what the final outcome of Nortel is going to be."

In addition, there's been tremendous price competition from Cisco Systems (Nasdaq:CSCO), Nokia Siemens and Alcatel-Lucent (NYSE:ALU), he said.

In the first quarter ended March 31, revenue fell to $1.73 billion down from $2.76 billion. The decline was worsened by the impact of currency fluctuations, which reduced overall revenue by $225 million, representing eight per cent of the decline.

The biggest revenue contributor, carrier networks, saw a 32 per cent decline from a year earlier to $737 million.

The enterprise solutions segment declined 41 per cent to $395 million, metro ethernet networks dropped 10 per cent to $360 million and the company's joint venture with LG fell by two-thirds to $188 million as a major contract came to an end and didn't contribute.

Zafirovski said Nortel's revenues actually held up fairly well, after adjusting for the impact of the Korean contracts and currency fluctuations the decline was probably less than 20 per cent.

The net loss for the three months ended March 31, reported in U.S. currency, was equal to $1.02 per share and compared with a year-ago loss of $138 million or 28 cents per share.

On the expense side, sales, general and administration were cut to $528 million in the first quarter of 2009, down from $597 million a year earlier while research and development spending fell 19 per cent to $341 million from $420 million.

Most of the cost reductions were a result of staffing reductions, which were made in late 2008 and early 2009 before and after the company got protection under Chapter 11 of the U.S. bankruptcy code, the Companies' Creditors Arrangement Act in Canada and elsewhere.

One of the few bright spots in Nortel's quarter was an increase in cash balance, which increased to $2.48 billion, a three per cent increase from $2.40 billion at the end of the fourth quarter of 2008.

The company said in January that it was seeking court protection, despite such a large cash balance, because under the current conditions Nortel wouldn't be able to get outside financing -- known as debtor-in-possession funding -- to pay for its restructuring.

Zafirovski declined to comment on various reports about potential suitors, such as Nokia Siemens as a buyer for Nortel's carrier business or Avaya as interested in its enterprise division, which sells communications equipment to businesses.

"There's lot of interest in our technology, our people, our know-how -- people that we've approached and many more have approached us," Zafirovski said.

In the meantime, Nortel is decentralizing its carrier sales and global operations functions over the coming weeks, another step in a strategy that was announced in November before the company sought court protection.

On the other hand, the Nortel Business Services organization to will be enlarged to include functions from global operations, corporate operations and finance.

Nortel shares, which are likely to become worthless as a result of the restructuring, fell 5.5 cents to 24 cents in afternoon trading Monday.